British car insurance prices rose at a record pace last year as providers sought to protect themselves against rising personal injury claims, insurer and roadside recovery group AA said on Friday.
Comprehensive motor insurance premiums rose 33.2 percent during 2010 to an average of 843 pounds (USD 1,340), the biggest increase since the AA began monitoring the market in 1994, it said.
The rise reflects efforts by motor insurers to recoup a sharp rise in payouts as the growing influence of “no win, no fee” lawyers encourages a rash of personal injury claims.
“A sharp growth in the number of accident management and personal injury claims firms has helped to develop a hard-sell system in Britain that encourages people to claim, even if they have not suffered an injury,” said Simon Douglas, Director of AA’s insurance arm.
British motor premiums began climbing in late 2009, when insurers, squeezed by soaring claims and slumping investment income, hiked their prices, having cut or frozen them for the best part of a decade because of intense competition.
Insurance executives and analysts have said the increase could allow the industry, dominated by the likes of Royal Bank of Scotland, Aviva, RSA and Admiral, to return to underwriting profitability this year, having paid out more in claims than it received in premiums for each of the last 15 years.
Source : Reuters
